Sprint Nextel buys controlling stake in Clearwire Corp

Just two days after agreeing to sell a majority stake in itself to Japan's Softbank for $20.1 billion, US wireless carrier Sprint Nextel Corp yesterday acquired a majority stake in its wireless network partner Clearwire Corp (See: Japan's Softbank to buy 70 % stake in Sprint Nextel for $20.1 bn).

Sprint Nextel, which already holds a 48-per cent stake in Clearwire, will pay Craig McCaw and his holding company Eagle River Holdings about $100 million for 30.9 million of Clearwire's Class A shares, or 4.5 per cent of the total, and 2.73 million of its Class B stock.

The purchase increases Sprint Nextel's stake in Clearwire to a controlling 50.8 per cent.

Analysts had expected Sprint Nextel to take control of Washington-based Clearwire, a provider of mobile and fixed wireless broadband communications services to retail and wholesale customers in the US, Belgium and Spain.

Clearwire is the fifth-largest wireless carrier in the US providing services to 88 markets in the country covering 134 million subscribers, but only a little over 1.3 million of subscribers are its direct customers, the remainder are Sprint subscribers who uses its 4G 802.16e mobile WiMAX service.

In 2008, Overland Park, Kansas-based Sprint sold its WiMax business to Clearwire as part of their 4G venture, then valued at an estimated $14.5 billion, which combined all the spectrum licenses owned by the two companies into a new firm.

Other investors like Intel Corp, Google Inc, Comcast Corp., Time Warner Cable Inc. and Bright House Networks have collectively invested $3.2 billion for a 22 per cent combined stake in Clearwire.

According to several media reports, Intel and Comcast as well as AT&T have raised objections to Sprint buying a controlling stake in Clearwire, while rival carriers Dallas-based AT&T and New Jersey-based Verizon Wireless have raised concerns on the Sprint Nextel-Softbank deal.

''Softbank's acquisition of Sprint and the control it gains over Clearwire will give one of Japan's largest wireless companies control of significantly more US wireless spectrum than any other company,'' Brad Burns, a spokesman for AT&T, said in a statement. ''We expect that fact and others will be fully explored in the regulatory review process.''